[Federal Register Volume 59, Number 221 (Thursday, November 17, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-28324]
[[Page Unknown]]
[Federal Register: November 17, 1994]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Social Security Administration
20 CFR Part 416
RIN 0960-AC86
Supplemental Security Income for the Aged, Blind, and Disabled;
Treatment of Augmented Veterans Benefits, Anderson, et al. v. Sullivan
AGENCY: Social Security Administration, HHS.
ACTION: Final rules.
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SUMMARY: These final regulations set out our policy, under the
supplemental security income (SSI) program, regarding the treatment of
veterans benefits that are increased (``augmented'') to provide for
dependents. The effect of these regulations is to clarify our treatment
of the ``dependent's portion'' of the veterans benefits.
DATES: Effective Date: November 17, 1994.
Applicability Dates: The application dates of these final
regulations are discussed in the SUPPLEMENTARY INFORMATION.
FOR FURTHER INFORMATION CONTACT: Regarding this document--Duane Heaton,
Legal Assistant, 3-B-1 Operations Building, 6401 Security Boulevard,
Baltimore, MD 21235, (410) 965-8470; regarding eligibility or filing
for benefits--our national toll-free number, 1-800-772-1213.
SUPPLEMENTARY INFORMATION: Section 1612 of the Social Security Act (the
Act) specifies certain items that are included as earned and unearned
income under the SSI program. Section 1612(a)(2)(B) provides that
unearned income includes, among other things, payments received as an
annuity, pension, retirement, or disability benefit, including veterans
compensation and pensions.
With regard to veterans benefits, in certain situations the veteran
or the veteran's surviving spouse's benefits are augmented on account
of the dependents of the veteran. Prior to November 1981, the Social
Security Administration (SSA) counted the entire benefit, including the
augmented portion, as income to the veteran or veteran's surviving
spouse for SSI purposes. In 1981, after the policy was successfully
challenged in the courts, SSA changed its policy, effective November 1,
1981, and published a ruling (SSR 82-31) which explained that for SSI
purposes the dependent's portion of an augmented veterans benefit would
not be counted as unearned income to the veteran or the veteran's
surviving spouse but as unearned income to the dependent.
The Anderson Case
SSA was challenged in Anderson, et al. v. Sullivan, No. CV-88-036-
GF (D. Mont., Nov. 21, 1989), for not applying the policy published in
SSR 82-31 to a nationwide class of recipients of veterans pensions
known as ``protected pensions.'' The protected pensions under Pub. L.
95-588 include pensions which are means-tested and paid under
provisions that predate the current ``improved pension'' program. In
Anderson, the plaintiff was a veteran's widow who received a veterans
protected pension and SSI disability benefits. Her pension was
augmented due to the presence of a dependent in her household. SSA
considered the full amount of the veterans pension, including the
dependent's portion, as income to Mrs. Anderson in determining the
amount of her SSI benefits. She filed suit against the Secretary of
Health and Human Services (the Secretary) seeking relief from our
practice of counting the dependent's portion of her veterans protected
pension as income to her. SSA had counted this as income to her because
of incomplete information received from the computer match between the
Department of Veterans Affairs (VA) and SSA with regard to veterans
protected pensions. On November 21, 1989, the court in Anderson ordered
the Secretary to promulgate, within 6 months, interim final regulations
that provide that the augmented portion of a veterans pension is not to
be counted as unearned income to the veteran or the veteran's surviving
spouse.
Provisions of the Regulations Under Anderson
Interim final regulations implementing the Anderson order were
published on May 18, 1990 (55 FR 20598). Consistent with that order, we
revised section 416.1123 of our regulations, which sets out how we
count unearned income. We added a new paragraph (e) to explain that if
you receive a veterans benefit that includes an amount paid to you
because of a dependent, we do not count as your unearned income the
amount paid to you because of the dependent.
The Paxton Case
The treatment of the dependent's portion of an augmented benefit
was also challenged in Paxton v. Secretary of Health and Human
Services, 856 F.2d 1352 (9th Cir. 1988). In Paxton, the plaintiff was
an SSI recipient. Mr. Paxton, the plaintiff's husband, received a
pension from the VA. In determining the amount of Mrs. Paxton's SSI
benefit in accordance with SSR 82-31, SSA reduced her SSI benefit by
the amount of the dependent's portion attributable to her from her
husband's veterans pension. Mrs. Paxton filed suit against the
Secretary seeking relief from the practice of counting as her unearned
income that portion of her husband's veterans pension that was
attributed to her.
The court in Paxton held that, as written, the current regulations
did not support counting the dependent's portion of the veterans
pension directly as unearned income to the dependent. On the same date
that we published the interim final regulations pursuant to the
Anderson court order, we also published an NPRM at 55 FR 20612 to
clarify our policy on the treatment of augmented benefits to prevent
future misinterpretation of the regulations, as occurred in Paxton.
Further, we published Acquiescence Ruling AR 90-1(9) on July 16, 1990
(55 FR 28946) to reflect the decision of the Ninth Circuit in Paxton.
Under AR 90-1(9), we do not count the dependent's portion of the
veterans benefit as unearned income to the dependent in the Ninth
Circuit. Upon the effective date of these regulations, we will rescind
AR 90-1(9) and supersede SSR 82-31 with a ruling that contains only the
policy of the obsoleted SSR 82-31 that is not the subject of these
regulations.
Implementing These Regulations in the Ninth Circuit
Some recipients in the Ninth Circuit may lose SSI benefits as a
result of the rescission of AR 90-1(9). To lessen the effect of the
rescission on those recipients, we will apply these regulations to them
only prospectively upon routine redetermination of eligibility. While
we realize that, due to variances in the dates of redetermination, some
of these individuals will benefit more from this treatment than others,
none of these individuals will lose any more SSI benefits than if these
regulations were applicable to them on publication, rather than on
redetermination, and most will lose less. Moreover, since the
publication date will not be used as the effective date of these
regulations for these individuals, our implementation will avoid the
negative consequences of overpayment determinations. This method of
implementation was not contained in the NPRM. However, AR 90-1(9) was
published subsequent to the publication of the NPRM, and accordingly,
the NPRM did not contemplate the effect of the AR's rescission upon
some recipients to whom the AR applied. In order to fully apprise the
affected claimants of the impact of these new rules, we decided that
the publication of our plan for implementing the regulations
prospectively at redetermination for those to whom AR 90-1(9) had been
applied should be part of the final rules.
Public Comment
Both the interim final rule and the NPRM which were published on
May 18, 1990, provided for a 60-day comment period. We received one
comment in response to the NPRM and it was relevant to both the interim
final rule and the NPRM. This comment was from an assistant director
for a State agency that serves individuals with mental retardation and
developmental disabilities. The comment generally supported the
regulations, but recommended further changes. We have summarized and
responded to the comment below.
Comment: The commenter believes the proposed regulations may be
inequitable to those dependents who neither receive nor materially
benefit from their portion of the augmented veterans benefit. The
commenter cited case experience of dependents living apart from the
veteran who did not receive any benefit from their dependent's portion
of the augmented veterans benefit. He proposes that the regulations
also provide that the dependent's portion will not be counted as the
dependent's income when it can be documented that such portion has not
been made available to the dependent or that the dependent has not
received in-kind income equal in value to the dependent's portion.
Response: We agree it may not be appropriate to count the
dependent's portion of the augmented veterans benefit payment as income
to the dependent in those cases where the dependent lives apart from
the veteran or the veteran's surviving spouse and does not receive the
benefit of his or her portion. If all or part of the dependent's
portion is not available for the benefit of the dependent, but is
counted as the dependent's unearned income for SSI purposes, he or she
may experience hardship and the inability to meet daily needs. Such a
result could be viewed as inconsistent with the purpose of the SSI
program which is to provide for the beneficiary's current needs when
his or her income and resources are below specified amounts.
However, where the dependent lives with the veteran or the
veteran's surviving spouse and the dependent's augmented portion of the
veterans benefit is included in the veteran's or the veteran's
surviving spouse's check, we believe that it is reasonable to assume
that the dependent benefits from his or her portion in this living
arrangement by the dependent having and using, for example, heat,
electricity, food, and space. Not only is it likely that the dependent
would be advantaged in some way from living with the veteran or the
veteran's surviving spouse, but it would be administratively onerous to
monitor the exact percentage of food, electricity, and heat used by the
dependent and the designated beneficiary of the veterans benefit in
order to document to what extent the augmented portion is used on the
support and maintenance of the dependent. In those cases in which the
veteran or the veteran's surviving spouse provides cash or in-kind
support to a dependent who does not reside with him or her, we will
count such support under other SSI income rules appropriate to the
nature of the support. We believe that this interpretation is
consistent with the statutory requirements of the SSI program.
Therefore, we are responding to this comment by revising
Sec. 416.1123(e)(2) to provide that the dependent's portion will be
counted as the dependent's unearned cash income if the dependent
resides with the veteran or the veteran's surviving spouse, or if the
dependent receives his or her own portion in a separate payment from
the VA.
The United States Courts of Appeals for the Second, Fourth,
Seventh, and Tenth Circuits have held that it is reasonable to count
the augmented portion of VA benefits as unearned income of the
dependent on whose behalf it is paid, in White v. Shalala, 7 F.3d 296
(2nd Cir. 1993), Kennedy v. Shalala, 995 F.2d 28 (4th Cir. 1993), Inman
v. Shalala, Nos. 93-2305 and 93-2941 (7th Cir., July 19, 1994), and
Ryder v. Shalala, 25 F.3d 944 (10th Cir. 1994).
We are aware that the United States District Court for the Middle
District of Florida has rejected this reasoning in Fair v. Shalala, No.
90-1263-CIV-T-22A (M.D. Fla., Aug. 2, 1993). We have sought appellate
review in this case, but will apply the operative court order pending
the resolution of the appeal.
Except for the changes noted above and several nonsubstantive
technical revisions, we are adopting the rules as proposed on May 18,
1990, at 55 FR 20612 and are restating the interim final rule published
on that same date at 55 FR 20598.
Regulatory Procedures
Executive Order 12866
We have consulted with the Office of Management and Budget (OMB)
and determined that these rules do not meet the criteria for a
significant regulatory action under E.O. 12866. Thus, they were not
subject to OMB review.
Paperwork Reduction Act
These final regulations impose no reporting/recordkeeping
requirements requiring OMB clearance.
Regulatory Flexibility Act
We certify that these final regulations will not have a significant
economic impact on a substantial number of small entities because these
regulations will affect only individuals. Therefore, a regulatory
flexibility analysis as provided in Pub. L. 96-354, the Regulatory
Flexibility Act of 1980, is not required.
(Catalog of Federal Domestic Assistance: Program No. 93.807--
Supplemental Security Income.)
List of Subjects in 20 CFR Part 416
Administrative practice and procedure; Aged; Blind; Disability
benefits; Public assistance programs; Reporting and recordkeeping
requirements; Supplemental Security Income (SSI).
Dated: September 22, 1994.
Shirley Chater,
Commissioner of Social Security.
Approved: November 8, 1994.
Donna E. Shalala,
Secretary of Health and Human Services.
For the reasons set out in the preamble, Part 416 of Chapter III of
Title 20, Code of Federal Regulations, is amended as follows:
PART 416--[AMENDED]
1. The authority citation for Subpart K of Part 416 continues to
read as follows:
Authority: Secs. 1102, 1602, 1611, 1612, 1613, 1614(f), 1621,
and 1631 of the Social Security Act; 42 U.S.C. 1302, 1381a, 1382,
1382a, 1382b, 1382c(f), 1382j, and 1383; sec. 211 of Pub. L. 93-66,
87 Stat. 154.
2. Section 416.1123(e) is revised to read as follows:
Sec. 416.1123 How we count unearned income.
* * * * *
(e) Certain veterans benefits.
(1) If you receive a veterans benefit that includes an amount paid
to you because of a dependent, we do not count as your unearned income
the amount paid to you because of the dependent.
(2) If you are a dependent of an individual who receives a veterans
benefit and a portion of the benefit is attributable to you as a
dependent, we count the amount attributable to you as your unearned
cash income if--
(i) You reside with the individual who receives the veterans
benefit, or
(ii) You receive your own separate payment from the Department of
Veterans Affairs.
[FR Doc. 94-28324 Filed 11-16-94; 8:45 am]
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